Home Workshops Products Contact Us

View this newsletter on-line, or read back issues

   

Tharp's Thoughts Weekly Newsletter

August 14, 2008 — Issue #385  
  
Workshops

September Workshop Schedule - Reserve Your Seat Now!

Article

E-Mini Futures – A Lot to Love and a Few Things to Respect by D.R. Barton

Understand Yourself

Understanding Your Core Issue, Part One: Van Shares His Story by Van K. Tharp, Ph.D.

You're Invited

Dinner with Dr. Tharp

Melita's Corner

How Do I Show Up? by Melita Hunt

Our apologies for the delayed delivery of this issue. We've had computer problems.

Coming Soon

September is Back-to-School Time, And Not Just for Kids

September 20-21-22 Peak Performance 101 with Van K. Tharp

Free yourself from internal conflicts that keep you from performing at a peak level. Learn more...

 

September 24-25-26 Advanced Peak Performance 202 with Van K. Tharp

Dr. Tharp's ultimate psychological workshop. Learn more...

Feature

E-Mini Futures – A Lot to Love and a Few Things to Respect

by
D.R. Barton

There was a time when August meant that all of the “A-Team” traders on Wall Street were heading to their tony summer homes in the Hamptons and trading activity slowed to a crawl.

That was then, this is now.

While the month is young, trading volume in the S&P 500 Index e-minis is holding strong and the daily range (which translates to trading volatility) remains high.

Average daily volume for contracts, while a touch lower than a very busy July, are higher now than at any time during April or May of this year.  And volatility has been great for short-term traders.  During the past year, the 14-day average of the ATR (Average True Range, a measure of daily range that accounts for gaps) has been above 20 points a day about 85% of the time!!  This makes the e-mini index futures particularly good and consistent trading instruments.

I’d like to offer an unabashed view of the electronic e-mini index futures markets.  Like many people’s relationships, there are certain things about e-minis that I love and other things that I just have to put up with.  So let’s look at both sides of the coin, and see what conclusions we can draw about these ultra-popular trading tools.

Things to Love About Index E-Minis

·                    Liquidity.  This is what allows us to enter and exit trades with minimum slippage.  S&P 500 are among the most liquid exchange traded instruments in the world. Other index e-minis are also very liquid and enjoy significant day trader participation.  These include the Dow, the Nasdaq and the Russell 2000. (More on each of these below).  Since the first quarter of 2007, the average volume of S&P e-mini contracts traded per day has doubled. 

·                    Level Playing Field.  With e-minis, all trades are computer matched and traded through an exchange (in this case the Chicago Mercantile Exchange).  This means that a trader at a terminal in Topeka, Kansas is not at a disadvantage to anyone trading e-minis around the world.  And the e-minis are one area where retail traders share the most equal footing with institutional traders.  The high level of liquidity also helps make a level playing field because its almost impossible for the spreads to get bigger than one tick in the four e-minis mentioned above. (The spread is the difference between the bid and offer prices).

·                    Leverage.  Overnight leverage on e-minis is high, at roughly 20:1 for the S&P 500 e-mini.  Day-trading leverage is screaming at most brokerages, with some brokerages allowing greater that 100:1 leverage.  It’s tougher to get a bigger bang for your trading buck than in e-minis.

·                    Predictable Movement.  One of the reasons that so many professional traders trade the index e-minis is because they have predictable price movement intraday.  This means that when prices approach certain points, there is a pattern of reaction that can be exploited.  This tradeable edge is a critical – and much loved – aspect of e-mini trading.

·                    An Index Personality for Everyone.  The four major indexes that are traded (S&P, Dow, Nasdaq and Russell) each have different personalities, while sharing the overall characteristics and trading styles of indexes.  The S&P is a bit slow and ponderous, with great fills and minimum slippage.  The Russell is the other end of the spectrum – moving quickly at the drop of a hat.  Both the Dow and Nasdaq fall somewhere in between.

Things About E-Minis that We Just Have to Put-Up With

There are quirks and idiosyncrasies in the e-minis as well.  Yes, they do have their downsides.  And just like our family members and significant others, these are things about e-minis that we’d love to change but can’t – so we just learn to live with them.

·                    Leverage – the Other Side of the Sword.  Great leverage can bring great reward, but it also brings great risk.  If you have a $10,000 account that allows you to trade on $1,000 margin, you can trade 10 Russell contracts.  A 10 point move in your favor will double your account; a 10 point move against you will wipe you out.  With leverage this high, proper risk management is absolutely critical.

·                    The Cumbersome S&P.  There are periods of time when the S&P seems to act like a huge oil tanker.  Never moving outside of a narrowly defined range.  (This has been less of an issue in the last year of trading – but it can happen at certain times.)

·                    Trend Days vs. Range Days.  Traders in all instruments have the problem of deciding if you’re in a trend or a range.  But for many, this is a particularly beguiling problem in the indexes.  Fortunately, there are some tools that can help us here.  But without those tools, many a trader has been caught on the wrong side of the market all day, only to look back in calmer times and see the error of their way!

·                    Differences in the indexes.  While the different personalities of the indexes give us different reasons to trade them based on conditions, set-ups, etc., they also mean that we have to learn about each instrument in order to trade them.  As with most worthwhile endeavors, there is no one size that fits all.

Trading e-minis is a bit like riding a really spirited horse – they are fast and exciting, but they can throw you for a loop if you’re not constantly vigilant and if you don’t use the right tools.  But at the end of the day, they are still to me the best way to get the most bang for your trading buck.

Great Trading!
D. R.

About D.R. Barton:  A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena.  He is a regularly featured guest on both Report on Business TV, and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio. His articles have appeared on SmartMoney.com and Financial Advisor magazine. You may contact D.R. at  “drbarton” at “iitm.com”. 

 

Workshops

Dinner at Dr. Tharp's 

All Peak 101 and 202 attendees are invited for dinner with Dr. Tharp, Monday September 22, 2008.

September 20-21-22 Peak Performance 101
September 24-25-26 Advanced Peak Performance 202

Click here for pictures of our April 2008 dinner.

 

Understand Yourself

Understanding Your Core Issue

Part One: Van Shares His Story

by
Van K. Tharp, Ph.D.

After many years of doing coaching work with people, studying human psychology and behavior, as well as doing much work on my own self exploration, I long ago concluded that everyone has a core issue inside of them—one issue that rules the subconscious more so than any other.  Because people are so afraid of that one core issue popping up, they tend to hide it deep within themselves.  Most hope it never surfaces and will do anything to keep from experiencing it. So it goes unresolved and continues to run thoughts, emotions and actions from deep within ourselves.

It’s important for each of us to remember we are not our emotions.  Instead, our emotions are energy flowing through us.  And what you resist tends to persist, even if it is buried deep inside. 

I’ve been busy this summer doing a new kind of self exploration that has led me on an extraordinary journey in dealing with my very core issue. This has been a powerful experience for me, and I’d like to share some of it with you. 

So let’s jump right into a little of Van’s early childhood history.

Childhood History

Six months after I was born, my father left for the Philippines.  He was involved in reconstruction after the war, but I was too young to understand that.  All I knew was that suddenly, I didn’t have a father.  My mother told me that I was so upset that I wouldn’t eat and it took a lot of work on their part to get food into me.

As I gradually got over my father leaving, my grandfather became my father-figure.  When I was two years old, my father returned.  Then my family moved to Japan—without my grandfather.  Thus, I was now losing my grandfather.  And for most of my childhood, I always thought of my Grandfather’s house as my home.

In Japan, I became particularly close to a Japanese housekeeper that we called Mitzi.  She was like a mother to me and to this date one of my treasures is a picture of Mitzi and I together.

But at five years old, I left Japan and I never saw Mitzi again.  It felt like my heart broke.  Gratefully, I went on to have my core family with me for the rest of my childhood.  Nevertheless, I think the psychological damage from the losses was done at that point. 

I don’t have any charge on any of these individual happenings because I’ve done many, many years of clearing work on my issues neutralizing them. However, my one core issue was still there, even after all the work I’d done.

Let me share another thing that happened.  My mother died of cancer in 1993 at the age of 85.  She’d lived a good life and I was at peace with her. I was actually happy that she had made her transition and could now join the rest of our family (my father died in 1977 and my sister died in 1988).  What I didn’t expect was a reaction that I had going through my mother’s things.

What I found among my mother’s things was a letter from Mitzi’s husband, written in 1958, trying so desperately to reach us.  When I read that letter, I became about as emotional as I can ever remember being.  It was my mother’s funeral, but I was crying over Mitzi.

Mitzi had eventually married a U.S. soldier and moved to the U.S.  My family was living in England, so we never saw her.  But my understanding is that my sister said something to upset her that caused a rift between our families.  Furthermore, I’d been told that Mitzi had died a few years later of a brain tumor before my family returned from England. 

So what does all this have to do with my core issue?  Well, my core issue has been a very deep sense of loneliness and emptiness inside.  I’ve only felt it a few times, but when it came up it was so bad that I never wanted to feel it again.  In fact, I tend to believe that my whole life has been about doing whatever was necessary not to feel that feeling.  I wouldn’t get too close to people because they might leave me, and I’d distract myself with work or escape activities. I’ve always felt like that emptiness was around someplace that I had to hide from it.

And Then Something Happened!

In June, I was in Florida doing a preparation course for my Oneness course in Fiji.  We were doing an exercise on strengthening your inner guidance.  We were asked to imagine the qualities we wanted our inner guidance to have so that our relationship would become very, very strong and wonderful and we were given blessings to help us produce that. I decided that I wanted an internal guidance that was very, very joyful.  

We were doing an exercise in which we concentrated on the qualities we wanted, asking the universe to give them to us.  And while we were doing that we were getting “hands on” oneness blessings.  I had three of them.  The first two felt very masculine, strong, and comforting.  But that wasn’t what I was looking for.  However, the third blessing given transferred a very gentle feminine energy into me.  And when I felt it, an immense joy came over me.  And suddenly, the word “Mitzi” came into my heart.

That evening, I felt this utter sense of completeness inside of me.  And I knew that it was now part of me and that I could never feel that dreaded sense of emptiness again.  I realized that feeling of emptiness was just an illusion.  It was just a feeling that I identified with and resisted.  Now, I have a new feeling of being whole and complete inside of myself, like I will never have to look outside myself again for that sense of fulfillment.  That feeling is within me and it is always available.

At that point I felt very, very happy. And my internal guidance (which feels like it is Mitzi) says that this is only the beginning of something much more magnificent to come.

Next week I’ll share an amazing twist in this story.  My memories of Mitzi triggered an amazing series of events, and I look forward to sharing more with you.

About Van Tharp: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling book Trade Your Way to Financial Freedom and his outstanding Peak Performance Home Study program - a highly regarded classic that is suitable for all levels of traders and investors. You can learn more about Van Tharp at www.iitm.com.

 

Melita's Inspirational Corner

How Do I Show Up?

by
Melita Hunt

Late last week while I was undergoing chemo, I had a number of other people in the room with me. One in particular caught my attention, but for all of the wrong reasons. Although she was quite elderly and almost legally blind, throughout the day she did nothing but complain and be rude to the nurses and everyone around her.

Initially, I gave her the benefit of the doubt and had compassion for her, thinking that she was having a bad day (we all weren’t thrilled to be there), but before long it was obvious that her obnoxious behavior was just the way she was. Absolutely everyone that happened to be there while she was being treated was being treated with contempt, including her own daughter. I was astounded that she was so rude to everyone that crossed her path, whether it was the food she was being fed, the chair she was sitting in, the temperature of the room or her inability to clearly hear conversations and her subsequent frustration with the doctors, nurses, her daughter and other patients. And the tone of her voice only added to the overall discomfort that everyone in the room was feeling. There were many raised eyebrows and shaking heads.

I must say, it took everything in me not to get up and talk to her about her behavior; however, I just let it be in this instance and hoped to never cross her path again.

It brought me back to the exercise that we did last week, whereby we took a look at where we want our lives to be in twenty odd years and whether we are on the right path to make that happen. What happened in the last 25 years to make this woman so miserable and obnoxious or was she always like that?

So this week, I am going to ask you to do another exercise to see where you stand in other people’s eyes. There are two ways to do this. You can either make up the words for yourself, or you can ask three other people.

Pick three people: one in your family, one that you work with and one who you regard as a friend. If you want to do this yourself, take some time to decide what they would say about you if they had to make a speech about you, both your good traits and your bad. Write a page by each person. Would they talk about your accomplishments or would they talk about who you are as a person? How much do they really know about you? What would they say they liked about you and what would they say your foibles are? What would they miss in the speech? What don’t they know about you?

If you are game enough, you can actually ask the three people on your list to write down ten good traits and ten unfavorable traits that they think you exhibit. I have found in the past that people don’t want to “hurt your feelings” so they will probably feel uncomfortable writing anything unfavorable unless you tell them that you really want them to and you won’t take it personally. This is purely an exercise to help you to see how you show up and appear to other people.

I have done this exercise at least three times and found that the favorable traits shocked me much more than the unfavorable, which just goes to show that the so-called “bad list” may not be quite so bad and that we are probably our own worst critics when it comes to our “good traits.”  You may even decide to write down your own list first for comparison. 

Then you can decide whether the person you are “being” out there in the world is the person that you really want to be. Or perhaps there are some traits that you can work on making better.    

Melita Hunt is the CEO of the Van Tharp Institute. If you would like to keep up with Melita’s progress regarding her recently diagnosed lung cancer (she is a never-smoker). Please feel free to read her blog at www.myleftlung.com. You can contact Melita at mel@iitm.com

 

Feedback

Feedback to Dr. Tharp and the Van Tharp Institute

Everything that we do here at the Van Tharp Institute is to help you improve as a trader and investor. Therefore, we love to get your feedback, both positive and negative!

Feel free to click below to leave us any comments so that we can serve you better.

Click Here for Feedback Form

Two Reports of Self Sabotage

Click here to read page one of each report, or to order. 

 

Do Not Reply to this email using the reply button as the email address is not monitored, your email will not be seen. Please click this link to contact us: suggestions@iitm.com

The Van Tharp Institute does not support spamming in any way, shape or form. This is a subscription based newsletter.

If you no longer wish to subscribe, Unsubscribe Here

To change your e-mail Address, click here

Or, paste this address in your browser: http://www.iitm.com/privacy_policy.htm

 

The Van Tharp Institute
102-A Commonwealth Court, Cary, NC 27511 USA
800-385-4486 * 919-466-0043 *  Fax 919-466-0408

Back to top

Copyright 2008 the International Institute of Trading Mastery, Inc.

.

.

.

.

.

.

Quote:

"Education is not preparation for life; education is life itself." ~John Dewey

..

..

.

.

.

.

.

.

Trouble viewing this issue?

  View On-line.

.

.

.

.

.

.

.

..


Buy Now

.

.

.

.

.

.

..

.

Back to top

.

.

..

.

.

.

.

.

.

.

.

.

.

Tharp Concepts Explained...

 

- Psychology of Trading

- System Development

- Risk and R-Multiples

- Position Sizing

- Expectancy

- Business Planning

Learn the concepts...

.

.

.

.

.

~

~~~~~

.Back to top

~

~

~

.

.

Free Downloads

Handbook for Traders and Investors

 

~

~

.

.

.

.

.

~~

~

Free Trading Simulation Game

A computerized version of Van's famous "marble game."

It is designed to teach you the important principles of proper position sizing.

Download the 1st three levels of the game for free. Register now.

~

.

.

~

~~~~~

.Back to top

..

.

.

.

Check out Dr. Tharp's Blog:

smarttraderblog.com  

~

.

.

Share this newsletter with a friend!

..

.

.

.

..Back to top

.

.

.

.

.

.

.

.

.

.

.

....

Share this newsletter with a friend!

~.~~~

~